It’s been a very good year, so far, for Louis Vuitton and Dior, two of the hottest fashion companies under the Louis Vuitton Moet Hennessy (LVMH) corporate umbrella. LVMH just reported its Q1 2021 financial results. As you’ll see, the revenues are impressive. This is despite, or perhaps due to, the pandemic.
Louis Vuitton and Dior are more than just a bright spot. Sales in the fashion group rose 37% over the comparable period in 2019 due to these two companies. 2019 was used as a benchmark since business virtually shuttered during Q1 2020 due to the COVID-19 crisis. As compared to 2020, revenue rose 45% on a reported basis (52% with comparable structure and exchange rates).
Perhaps not surprisingly, Wine & Spirits was another bright spot with sales rising 17% compared to the same quarter 2019. As we’ve seen, there’s been a lot of alcohol consumption in the past year.
To be clear, not all of the LVMH siblings soared. Perfumes & Cosmetics declined 4% as compared to 2019. The “Selective Retailing” group, which includes Sephora, dropped 30% as compared to Q1 in 2019.
Nevertheless, certainly due in no small part to Louis Vuitton and Dior’s success and popularity, LVMH as a whole ended the quarter up 8% over 2019’s first quarter.
So, how did these brands generate impressive revenues amidst a global health crisis? Louis Vuitton, as we well know, took repeated and multiple price increases on its popular handbags. Following suit, Dior also increased prices on many items. Certainly, that lifted both the top and bottom lines.
Furthermore, Louis Vuitton, and, to a lesser degree, Dior each have a strong digital presence and virtual store. Even more importantly, Louis Vuitton boasts some of the most popular bags on the market right now. One look at the sheer number of sold out bags on its website illustrates just how hot the brand is.
Moreover, the ability to sell online at a time when stores were shuttered likely protected these companies. Recall that Asia reopened as France was first closing in 2020. International travel came to a standstill. Chinese consumers, for example, who typically shop on holiday, instead shopped at home. As seen in the data, Asia (not including Japan) achieved a 26% improvement in revenue over Q1 2019 and 86% over the same 2020 time period. Although the report does not break down business lines by geography, the success of LVMH in Asia and of the fashion and leather division suggests a strong correlation.
Clearly, the latest financial reporting from LVMH sets a high bar for the luxury market. Are you surprised? Do you expect other companies to also excel?